I 

114TH CONGRESS 

1ST SESSION H. R. 880 

To amend the Internal Revenue Code of 1986 to simplify and make 

permanent the research credit. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 11, 2015 

Mr. BRADY of Texas (for himself, Mr. LARSON of Connecticut, Mr. SAM

JOHNSON of Texas, Mr. SCHOCK, Mr. MCCAUL, and Mr. NEAL) introduced the following bill; which was referred to the Committee on Ways 

and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to simplify 

and make permanent the research credit. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘American Research 

5 and Competitiveness Act of 2015’’. 

6 SEC. 2. RESEARCH CREDIT SIMPLIFIED AND MADE PERMA7 NENT. 

8 (a) IN GENERAL.—Section 41(a) of the Internal Rev9 enue Code of 1986 is amended to read as follows: 


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1 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

2 research credit determined under this section for the tax3 able year shall be an amount equal to the sum of— 

4 ‘‘(1) 20 percent of so much of the qualified re5 search expenses for the taxable year as exceeds 50 

6 percent of the average qualified research expenses 

7 for the 3 taxable years preceding the taxable year 

8 for which the credit is being determined, 

9 ‘‘(2) 20 percent of so much of the basic re10 search payments for the taxable year as exceeds 50 

11 percent of the average basic research payments for 

12 the 3 taxable years preceding the taxable year for 

13 which the credit is being determined, plus 

14 ‘‘(3) 20 percent of the amounts paid or in15 curred by the taxpayer in carrying on any trade or 

16 business of the taxpayer during the taxable year (in17 cluding as contributions) to an energy research con18 sortium for energy research.’’. 

19 (b) REPEAL OF TERMINATION.—Section 41 of such 

20 Code is amended by striking subsection (h). 

21 (c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN22 IMUM TAX IN CASE OF ELIGIBLE SMALL BUSINESS.— 

23 Section 38(c)(4)(B) of such Code is amended by redesig24 nating clauses (ii) through (ix) as clauses (iii) through (x), 


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1 respectively, and by inserting after clause (i) the following 

2 new clause: 

3 ‘‘(ii) the credit determined under sec4 tion 41 for the taxable year with respect to 

5 an eligible small business (as defined in 

6 paragraph (5)(C), after application of rules 

7 similar to the rules of paragraph (5)(D)),’’. 

8 (d) CONFORMING AMENDMENTS.— 

9 (1) Section 41(c) of such Code is amended to 

10 read as follows: 

11 ‘‘(c) DETERMINATION OF AVERAGE RESEARCH EX12 PENSES FOR PRIOR YEARS.— 

13 ‘‘(1) SPECIAL RULE IN CASE OF NO QUALIFIED

14 RESEARCH EXPENDITURES IN ANY OF 3 PRECEDING

15 TAXABLE YEARS.—In any case in which the taxpayer 

16 has no qualified research expenses in any one of the 

17 3 taxable years preceding the taxable year for which 

18 the credit is being determined, the amount deter19 mined under subsection (a)(1) for such taxable year 

20 shall be equal to 10 percent of the qualified research 

21 expenses for the taxable year. 

22 ‘‘(2) CONSISTENT TREATMENT OF EX23 PENSES.— 

24 ‘‘(A) IN GENERAL.—Notwithstanding 

25 whether the period for filing a claim for credit 


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1 or refund has expired for any taxable year 

2 taken into account in determining the average 

3 qualified research expenses, or average basic re4 search payments, taken into account under sub5 section (a), the qualified research expenses and 

6 basic research payments taken into account in 

7 determining such averages shall be determined 

8 on a basis consistent with the determination of 

9 qualified research expenses and basic research 

10 payments, respectively, for the credit year. 

11 ‘‘(B) PREVENTION OF DISTORTIONS.—The 

12 Secretary may prescribe regulations to prevent 

13 distortions in calculating a taxpayer’s qualified 

14 research expenses or basic research payments 

15 caused by a change in accounting methods used 

16 by such taxpayer between the current year and 

17 a year taken into account in determining the 

18 average qualified research expenses or average 

19 basic research payments taken into account 

20 under subsection (a).’’. 

21 (2) Section 41(e) of such Code is amended— 

22 (A) by striking all that precedes paragraph 

23 (6) and inserting the following: 

24 ‘‘(e) BASIC RESEARCH PAYMENTS.—For purposes of 

25 this section— 


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1 ‘‘(1) IN GENERAL.—The term ‘basic research 

2 payment’ means, with respect to any taxable year, 

3 any amount paid in cash during such taxable year 

4 by a corporation to any qualified organization for 

5 basic research but only if— 

6 ‘‘(A) such payment is pursuant to a writ7 ten agreement between such corporation and 

8 such qualified organization, and 

9 ‘‘(B) such basic research is to be per10 formed by such qualified organization. 

11 ‘‘(2) EXCEPTION TO REQUIREMENT THAT RE12 SEARCH BE PERFORMED BY THE ORGANIZATION.— 

13 In the case of a qualified organization described in 

14 subparagraph (C) or (D) of paragraph (3), subpara15 graph (B) of paragraph (1) shall not apply.’’, 

16 (B) by redesignating paragraphs (6) and 

17 (7) as paragraphs (3) and (4), respectively, and 

18 (C) in paragraph (4), as so redesignated, 

19 by striking subparagraphs (B) and (C) and by 

20 redesignating subparagraphs (D) and (E) as 

21 subparagraphs (B) and (C), respectively. 

22 (3) Section 41(f)(3) of such Code is amended— 

23 (A)(i) by striking ‘‘, and the gross re24 ceipts’’ in subparagraph (A)(i) and all that fol25 lows through ‘‘determined under clause (iii)’’, 


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1 (ii) by striking clause (iii) of subparagraph 

2 (A) and redesignating clauses (iv), (v), and (vi), 

3 thereof, as clauses (iii), (iv), and (v), respec4 tively, 

5 (iii) by striking ‘‘and (iv)’’ each place it 

6 appears in subparagraph (A)(iv) (as so redesig7 nated) and inserting ‘‘and (iii)’’, 

8 (iv) by striking subclause (IV) of subpara9 graph (A)(iv) (as so redesignated), by striking 

10 ‘‘, and’’ at the end of subparagraph (A)(iv)(III) 

11 (as so redesignated) and inserting a period, and 

12 by adding ‘‘and’’ at the end of subparagraph 

13 (A)(iv)(II) (as so redesignated), 

14 (v) by striking ‘‘(A)(vi)’’ in subparagraph 

15 (B) and inserting ‘‘(A)(v)’’, and 

16 (vi) by striking ‘‘(A)(iv)(II)’’ in subpara17 graph (B)(i)(II) and inserting ‘‘(A)(iii)(II)’’, 

18 (B) by striking ‘‘, and the gross receipts of 

19 the predecessor,’’ in subparagraph (A)(iv)(II) 

20 (as so redesignated), 

21 (C) by striking ‘‘, and the gross receipts 

22 of,’’ in subparagraph (B), 

23 (D) by striking ‘‘, or gross receipts of,’’ in 

24 subparagraph (B)(i)(I), and 


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1 (E) by striking subparagraph (C) and in2 serting the following new subparagraph: 

3 ‘‘(C) ADJUSTMENTS FOR BASIC RESEARCH

4 PAYMENTS.—In the case of basic research pay5 ments, rules similar to the rules of subpara6 graph (A) and (B) shall apply.’’. 

7 (4) Section 41(f)(4) of such Code is amended 

8 by striking ‘‘and gross receipts’’ and inserting ‘‘and 

9 basic research payments’’. 

10 (5) Section 45C(b)(1) of such Code is amended 

11 by striking subparagraph (D). 

12 (6) Section 45C(c)(2) of such Code is amend13 ed— 

14 (A) by striking ‘‘base period research ex15 penses’’ and inserting ‘‘average qualified re16 search expenses’’, and 

17 (B) by striking ‘‘BASE PERIOD RESEARCH

18 EXPENSES’’ in the heading and inserting ‘‘AV19 ERAGE QUALIFIED RESEARCH EXPENSES’’. 

20 (7) Section 280C(c) of such Code is amended— 

21 (A) by striking ‘‘basic research expenses 

22 (as defined in section 41(e)(2))’’ in paragraph 

23 (1) and inserting ‘‘basic research payments (as 

24 defined in section 41(e)(1))’’, and 


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1 (B) by striking ‘‘basic research expenses’’ 

2 in paragraph (2)(B) and inserting ‘‘basic re3 search payments’’. 

4 (e) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as provided in para6 graph (2), the amendments made by this subsection 

7 shall apply to taxable years beginning after Decem8 ber 31, 2014. 

9 (2) SUBSECTION (b).—The amendment made 

10 by subsection (b) shall apply to amounts paid or in11 curred after December 31, 2014. 

Æ 


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